Once
you have decided you are in the market for a home it does not take long before
you start looking for the perfect property. You sit down set your criteria in a searchbar and start dreaming about what your
new castle will look like. Stop, you just made mistake #1
1. KNOW HOW MUCH YOU CAN AFFORD BEFORE YOU START LOOKING.
Looking
at dream homes on Pinterest is fine and is
great for inspiration, but when looking for a serious home the first thing you
need to know is how much you are approved for. Visiting a lender is not nearly
as exciting as looking for homes online (Don’t you click this link until you are approved), but it is the first step in a
process that if not executed correctly may make buying a home unobtainable.
Buying a home is easily one of the biggest decisions you will ever make, so
before going on the open house circuit you need to get into a lenders office
and find out what type of budget you are working with. Don't commit yourself to 30 years of payments without doing your homework, which leads us to mistake #2
2. NOT BEING PREPARED.
When
you sit down with a lender and they pull your credit score it should not feel
like a surprise. Lenders are great at telling you the things you can do to
improve your credit score, but changes to your credit score take time and
adjustments in behavior. Having a good credit score can improve your interest
rate and save you big dollars over the life of that loan. Sometimes a few
simple actions can improve your credit dramatically. More then 79% of all
Americans credit scores contain errors. According to the Federal Reserve 25% of credit reports contain errors that are deal
breakers for lenders. Before you step into a lenders office get your credit
score, if your score is not ideal consult a credit-reporting agency. Once a
year you are entitled to a free credit report, utilize this resource and be
informed.
3. NOT BEING HONEST.
Not
so long ago there was a process of receiving loans based on income that you did
not have to provide supporting evidence for. These non-document loans are now
referred to as “liar loans” and many people
ended up with loans that they could not afford. The days of being self-employed
and not having to show your tax returns are long gone. Obtaining credit is
nowhere as easy as it was, and for good reason. Don’t let your ego get in the
way. You may be tempted to stretch the truth on your application to get a
larger loan, but doing so will put you in jeopardy of getting your loan denied.
4. CHANGING YOUR JOB.
Employment
history is key to getting approved for a loan. Most lenders will want to see 2
consecutive years of work history with the same employer. By switching jobs
before or during the approval process you run risk of getting your application
denied. In the best case scenario switching your job will delay the process
while employment is confirmed. Do yourself a favor and wait to switch jobs
until you have made your first house payment.
Buying
a house is exciting and shopping for your new house
may be even more fun! Don’t even think about it. Just before closing escrow,
lenders may do something called a “soft pull” of your credit. If your debt to
income ratio has changed you may not qualify for your mortgage any longer.
Imagine how bad it feels to purchase all of the things you want to put in your
home only to find out that you no longer can afford it in the eyes of the
lender. Keep you credit cards tucked away until after escrow closes and the
deal is done.
The
process sounds intimidating, but using the right lender in combination with the
great Realtor can take most of the bumps out of the road. Just be prepared,
informed and don’t make any major life changes between the application process
and your closing and you will be fine.
Want to do a little searching on your own after getting approved for a loan? Let us help, use our custom search bar for information about Real Estate in the local Spokane Area, simply type in any criteria you desire and get immediate relevant results.
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